Feds on auto scandal: Fiat Chrysler sought to corrupt talks with UAW

Over a period of years, former Fiat Chrysler executive Al Iacobelli and former UAW Vice President General Holiefield helped to save Chrysler and then stole millions intended for worker training, authorities say.
Wochit

The statement in a sentencing memorandum for Alphons Iacobelli, a former vice president of employee relations for FCA, is part of what appears to be a dramatic uptick in the rhetoric directed toward the automaker. The company, for its part, insisted in a response to the allegations that wrongdoing was limited to certain bad actors and did not affect contract bargaining.

Prosecutors, however, said the automaker wanted to influence labor contracts and that union officials failed in their duties to represent union members.

"FCA sought to obtain benefits, concessions and advantages in the negotiation and administration of collective bargaining agreements with the UAW in an effort to buy labor peace. High-level officials of the UAW sought to enrich themselves and live lavish lifestyles rather than zealously work on behalf of the best interests of tens of thousands of rank and file members of their union," according to the 14-page document filed Monday.

The paperwork also says Fiat Chrysler provided more than $9 million in illegal chargebacks — money from FCA used to pay the salaries of UAW officials at the training center, a place that was supposed to provide for autoworker training — between June 2009 and July 2017. The government said Iacobelli and FCA viewed the chargebacks as a political gift to the UAW and that high-level UAW officials assigned union officials to the training center "with no intention that they would perform any real work at the NTC."

The dollar figure suggests the government believes it was an even more pricey scheme than previously reported. Earlier stories had focused on allegations that $4.5 million had been misused, in part, on expensive clothing, jewelry and travel.

In its response to the allegations, the company called itself a victim in the case.

“FCA US firmly restates that it was a victim of illegal conduct by certain rogue individuals who formerly held leadership roles at the National Training Center (NTC), an independent legal entity. FCA US also confirms that the conduct of these individuals had no impact on the collective bargaining agreement," according to a company statement issued Monday evening.

The company said the actions involved "a small number of bad actors, who, for personal gain, misappropriated training funds entrusted to their control and who, unfortunately, co-opted other individuals who reported to them to carry out or conceal their activity over a period of several years.”

The union has also insisted the case is limited to a few bad actors.

"The UAW has zero tolerance for corruption or wrongdoing, at any level of the organization. Now, our leadership team had no knowledge of the misconduct — which involved former union members and former auto executives — until it was brought to our attention by the government," according to remarks last year by then-UAW President Dennis Williams.

The sentencing paperwork does, however, also focus on the specific role of Iacobelli, with the government pointing to his efforts to cooperate and suggesting a sentence of six years and four months rather than a possible eight-year sentence. Iacobelli is scheduled to be sentenced on Aug. 27.

"The court's sentence should reflect the seriousness of Iacobelli's crimes and the need to deter corporate executives, corporations, union officials and labor unions from similar conduct. At the same time, the sentence should account for Iacobelli's acceptance of responsibility and his sincere efforts at revealing vast labor-management corruption and assisting in efforts to end it," according to the memorandum.

Prosecutors also said Iacobelli was able to avoid more than $800,000 in taxes on the “significant stream of income he directed to himself.”

Authorities previously said Iacobelli used $1 million in training center funds to buy a new pool, $35,000 pens and even a Ferrari.

Prosecutors noted that Iacobelli, for certain aspects of the negotiations and relationship with the UAW, reported directly to former FCA CEO Sergio Marchionne, who died in July.

In his own sentencing memorandum, Iacobelli's attorney, David DuMouchel, argued that the corruption at the heart of the case — bribing of UAW officials with travel, jewelry, cash and more — preceded Iacobelli. DuMouchel requested a sentence of 37-46 months in prison.

Peter Henning, a Wayne State University law professor and former federal prosecutor, had noted previously that the government appeared to be more directly focusing its fire on the automaker.

He said that language in the plea agreement this year for former FCA director of employee relations Michael Brown indicates that the Justice Department sees a more widespread case.

"I think that the Justice Department is making the point that it wasn’t just lining their pockets, but that this went much deeper, that this affected the union contracts," Henning told the Free Press in June.

Authorities said Iacobelli worked closely with the late General Holiefield, a former UAW vice president, on the scheme.

Holiefield's widow, Monica Morgan, was the first person to be sentenced in the scandal.

U.S. District Court Judge Paul Borman issued an order last week that will allow Morgan to report for prison on Oct. 1, rather than Aug. 29.

Morgan had requested the extra time "to allow her to finish putting her personal affairs in order," according to the paperwork signed by the judge.

Last month, Morgan, a prominent metro Detroit photographer, filed paperwork to appeal her 18-month sentence on a tax charge, to which she pleaded guilty in February. That case is with the U.S. 6th Circuit Court of Appeals.

Authorities said Morgan hid $201,000 on her 2011 taxes, and Morgan, in plea documents, acknowledged that the money came from criminal activity.

Two other defendants in the case — Keith Mickens, a former labor leader, and ex-FCA analyst Jerome Durden — were expected to appear in court Friday for sentencing, but those proceedings have been rescheduled for Nov. 7.